guidance on administration aspects, such as using a SuperStream compliant payment process.

The ATO has also developed a step by step guide for employees who have unpaid super that includes a tool to estimate eligible super contributions through to lodging an enquiry to report employers for unpaid amounts.

The term self-managed superannuation fund – otherwise known as an SMSF – basically refers to do-it-yourself super. Having an SMSF means simply having control of how your superannuation is being invested, and it has recently become a popular method of saving for retirement.

If you choose to go down this path, it’s essential that you are aware of the administrative and compliance requirements of SMSFs. The information below should answer many of the questions and obligations specific to managing your own SMSF.

Before you consider leaving your current superannuation fund to establish an SMSF, you should discuss your options in detail with a financial planner.

An SMSF is a trust where funds or assets are held and managed on behalf of a maximum of four individuals, to provide future retirement benefits. Subject to certain exceptions, all members of an SMSF must be trustees of the fund or directors of the fund’s corporate trustee.

What are the benefits?

The main rationale for establishing your own SMSF is the increased level of control you have, as well as the investment choice and flexibility. You become the trustee of your fund and therefore make decisions on your fund’s investment strategy and the type of assets that are held within your fund.

Your SMSF can also invest in almost anything, including investments not usually available in a public super fund (please note, however, that these investments are subject to certain limitations and legal restrictions). This will allow your fund’s investments to be customised to suit the precise requirements of members, before and after retirement.

Furthermore, similar to all complying super funds, an SMSF is taxed at a concessional rate. The top tax rate for investment earnings from your SMSF is 15 per cent. This tax concession, however, is only available for complying funds – which are SMSFs that fulfil all the rules set out by the ATO, the Superannuation Industry (Supervision) (SIS) Act 1993 and the SIS Regulations.

Things to consider

Who are the governing bodies?
The Australian Taxation Office (ATO) is responsible for overseeing the regulation of SMSFs. While the ATO’s regulatory approach to SMSFs has been focused mainly on education and information, it is fast becoming more aggressive in its stance on fund compliance.

Obligations and rules
As an SMSF investor, you need to consider your fund’s investment philosophy – like any other super investment, you will need to establish what the acceptable rate of return is and how much risk you are willing to take with your retirement savings. These are areas where professional management can be a good idea.

As an SMSF trustee, you are required to regularly review the investment strategy of your fund and consider insurance for the members of your fund.

Many investors who open an SMSF employ the services of specialist administrators to take on the difficult compliance activities on behalf of their fund. This is beneficial as they can still enjoy the investment control and flexibility without the added burden of administration.

Your fund’s compliance with superannuation law is vital and you are legally accountable for ensuring your fund complies with all the rules – even if you pay for professional management.

The main components of compliance for an SMSF relate to:

how and when an SMSF is permitted to borrow in-house asset rules

acquisition of assets from related parties, and

conducting all dealings at arm’s length.

Sole purpose test
The foundation of the SMSF regulatory system is the ‘sole purpose test’ – the sole purpose of your fund should be to provide retirement benefits to fund members.

Separation of assets
The assets of the fund must be separate to those of a business where one or more of the trustees are involved. For instance, if the trustee is declared bankrupt or if their business is placed in receivership and the assets are held in the name of that trustee, rather than being clearly held as a part of the fund, the fund risks the loss of the asset. The failure to separate assets is a clear contravention of SIS.

Investments
To assist in making sure the assets in an SMSF are available to produce retirement funds, SMSFs are limited in the investments they can make. However, one of the concessions that the SMSFs can enjoy, is the ability to invest up to 100 per cent of the funds’ assets in a business real property. The disadvantage of this, however, is the lack of investment diversification and liquidity.

More restrictive rules apply to investments in personal use assets and collectables, that are in addition to the sole purpose test. Under the latter members cannot enjoy the benefit from the investment prior to reaching their retirement age. This means that unless strict conditions are met and must be removed from the fund – like in the case of leasing the art to a member or related party, in line with the ‘in-house asset’ and ‘arm’s-length’ rules – the art cannot be displayed in the trustee’s home or office.

The in-house asset rules suggest that the particular investment can make up a maximum of 5 per cent of the fund’s entire assets and the arm’s-length requirement means that it should be leased to the related party at commercial rates.

Trustee responsibilities
It is of the utmost importance to meet trustee responsibilities, especially in regard to the SMSF holding its own bank account (and not personal accounts), and ensuring this account isn’t overdrawn.

SMSFs that comply with all regulations are demonstrating to the ATO that they are appropriately managed. It is also important to note that the costs associated with the management of the SMSF, including ensuring compliance with all regulations, generally means that fund members collectively need between $200,000 and $250,000 to make the exercise of establishing an SMSF worthwhile. This does not include the initial set up costs involved.

To discuss your SMSF options, contact our office to speak to one of our SMSF Specialists.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

How many super funds do you have? Chances are you are probably not keeping track of where your super money is invested. In fact, you could even be losing money right now. Consolidating all your super into one account puts you back in control of your retirement savings and it will save you account-keeping fees.

If you have changed jobs, changed your name or moved house, chances are you may have lost track of where your super is invested.

The Australian Taxation Office (ATO) estimates lost superannuation to be worth around $14 billion as at 30 June 2016.1

By tracking down and consolidating your super accounts, you will save having to pay multiple sets of administration fees. Over the years, this could add up to thousands of dollars towards your final superannuation benefit.

Benefits of consolidating

Reduced fees: paying only one administration and/or member fee means additional fees are not eating away your retirement savings. For example, if you’re paying $5 per month in member fees on three different accounts, you’re paying at least $180 per year in member fees.

It’s easier to keep track of the growth of your super savings by having your contributions go into one fund. What’s more, you’ll receive only one statement or fund update, meaning less paperwork to manage.

It allows you to develop a focused and effective retirement investment strategy, as you don’t have a number of neglected, smaller accounts that you lose track of, which get eaten away by fees and inflation.

What should you do if you’ve lost track of your super accounts?

Lost super refers to super accounts where the member has simply forgotten about their account, or their fund has lost track of the member’s contact details. In some instances, there may be super accounts in your name that you didn’t even know existed.

In Australia, complying super funds (funds which meet certain Government requirements) are required by law to notify the ATO of lost members.

A member becomes lost when two written communications are returned to the super fund unclaimed. Lost members’ details are given to the ATO and their account balance is held by the super fund until claimed or, depending on the balance, it can be transferred to an eligible rollover fund.

If you’ve lost track of one of your super accounts, you can start by calling the ATO’s superannuation help line on 13 10 20 and choose the lost members’ register option or visit www.ato.gov.au/superseeker. Make sure you have your tax file number handy. Your financial adviser can also help you track down your super and consolidate it.

Things you should consider

Life insurance
Your existing super fund may include life insurance, income protection insurance or other personal insurance. If you want to maintain the same or a greater level of insurance, check with your new super fund if this cover can be established before closing your existing super fund otherwise you may be in a position of having no insurance cover.

Time out of the market
It generally takes several weeks to close an existing super fund and transfer the funds to a new super fund. This is because the underlying investments in your existing super fund have to be sold and underlying investments in your chosen super fund purchased. During this time, a portion of your funds are likely to be invested in cash rather than your selected assets. This means if the value of your selected assets rise you won’t get the full benefit, but if the value drops, you would receive a better return from the cash investment.

Your financial adviser is not limited to any one superannuation provider; they can, therefore, provide you with advice on a range of superannuation funds and will always look to provide you with the most appropriate fund for your specific needs.

For assistance consolidating your super, contact us today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Happy New Financial Year!

The new financial year is the perfect time to take the leap and bridge the gap between you and your finances.

We know that every individual and family is different. That is why we custom tailor our Financial Planning Services to your stage in life and your destination of what it is that you would like to achieve. Put simply, we produce for you a tailored report that illustrates what your future financial position might look like based on your current financial circumstances, life goals and needs.

Using information such as:

– your likely retirement age

– household income and expenditure

– current assets and liabilities

– superannuation balance

We are able to map out a LIFEPLAN and visually demonstrate how much you can afford to spend or invest today in order to provide for a better financial future.

This will give you a clear guide of how much money you will need in retirement, an estimate of how much money you’ll have in retirement if you stick on your current path, and a roadmap of how to ensure you get to your chosen destination and have the retirement that you deserve.

Send us a message via Facebook, email us or give us a call to arrange your no-obligation phone consultation with James to see if LifePlan can help you.